High energy demand in China is pushing the need for new smart energy startups

Growing population and surging energy demands in China have resulted in high demands for alternative energy sources and innovative ways of how energy is both consumed and managed in the region.

Figure: China is making significant steps to improve its urban regions and integrate the energy industry with clean, alternative methods of generating energy.

China contains the highest energy consumption levels in the world and forecasts indicate the rate of demand is not slowing down. Data suggests electricity consumption increased by over 6% last year and the World Resources Institute believes that as urban areas in China continue to develop, the energy consumed by these regions will increase by nearly 40% over the next 15 years.

At present, building consumes nearly 70% of energy but waste nearly 60% of it which equates to approximately $100 billion of electricity wasted every year. This is a significant cost financially but also has considerable implications for the environment. The National Development and Reform Council of China (NDRC) suggest that 70% of carbon emissions in China come from cities and about a third of this comes directly from the building sector.

The government has now proposed new plans to drive smarter energy use in urban areas with a priority on building efficiency. With this as a priority and a rapidly growing building sector, there are more opportunities developing in the smart energy sector. With a further recognition of the benefits of smart energy, there is more opportunity for new innovative energy solutions to be launched in China.

Over 500 cities have now pledged to an agenda towards smart city transformation. This has resulted in a considerable focus on artificial intelligence (AI), Internet of Things (IoT) and big data as vital tools to include in smart city development.

In 2016, the Chinese government partnered with Alibaba and Foxconn to create the City Brain Project, studying how AI and big data can be utilised in urban areas. Using specific tools, the project can provide real-time information and analyse urban operations and how they can be improved.

A US-based start-up called Verdigris that focuses on IoT has created a method of making the concrete building come alive. Verdigris provide an AI-powered platform that can generate energy consumption analysis from smart sensors attached to electrical circuits on the building. The real-time information is sent to the cloud, providing continuous and reliable information on building performance, replacing the sporadic building audits and surveys generally performed. The startup business has gained success elsewhere and now has a lot of interest from the Chinese market.

Barriers to entering the Chinese market.

The Chinese may well be welcoming to new foreign technology but there are challenges with data being transferred out of the country. The government has stricter regulations on data due to tightening its cybersecurity rules and businesses storing Chinese data overseas. China has massive potential but experts emphasise it is a challenging market to develop, especially for startup businesses looking to expand the smart energy market.

The demand for smart energy is likely to continue to grow. Businesses looking to develop smart energy technology in this growth area will need to consider the nature of their technology and how it can be aligned with the systems in China and their rapidly developing urban societies.